With less than 10 days left until the highly anticipated Bitcoin halving event, which is usually seen as a precursor to a rapid increase in Bitcoin price, analysts at CryptoQuant believe that the diminishing impact of the supply reduction is becoming evident.
According to CryptoQuant’s analysis, the impact of the halving on the Bitcoin market is gradually diminishing. They noted that between 2021 and 2023, there have been several instances of a long-term holder demand exceeding supply, but the current supply-demand gap is larger than ever before, indicating that the market was already in a state of supply shortage before the halving. Therefore, even with a further reduction in supply after the halving, the upward pressure on Bitcoin price may not be as significant as in the past.
Furthermore, the chart below shows a continuous decline in the monthly issuance of Bitcoin, which currently accounts for less than 4% of the total available supply. This proportion is significantly smaller compared to the previous halvings, where the issuance accounted for 69%, 27%, and 10% of the total available supply before the first, second, and third halvings, respectively. This further proves the strong demand for Bitcoin in the market, with investors continuing to buy or hold onto their Bitcoin.
CryptoQuant also revealed from their analysis that the demand from whale holders, who hold 1,000 to 10,000 Bitcoins, has reached its historical peak, with their holdings increasing by 11% compared to the previous month. Long-term holders are adding as much as 200,000 Bitcoins to their balances each month, which is about seven times the monthly new issuance of 28,000 Bitcoins.
In past cycles, the surge in holdings from whales (purple area in the chart) has been a significant factor driving the increase in Bitcoin price. Therefore, CryptoQuant believes that demand growth seems to be the main driving force behind the price increase after the halving.
This highlights a key perspective that price is determined by supply and demand. While the halving directly reduces supply, CryptoQuant places more emphasis on the growth in demand as the key driving factor for the increase in Bitcoin price, rather than just the potential boost from the halving.
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